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Ways for Filipino Freelancers to Pay Taxes in the Philippines

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

@John Paul Z wrote:

Thanks again Juvy!

Another question though haha LOL my first month I was assisted by a friend who is a CPA in terms of dealing with the BIR monthly filing and all that. Do you have someone who do that for you or do you do it on your own?

 

Thank you.

 

Essentially, the mighty engineers of Upwork help me in the maintenance of my business records.  I regularly download my own set of CSV files then I summarize everything in a giant spreadsheet similar to the one below. I integrate the foreign exchange rate into the matrix.  It becomes easy to compute everything with MS Excel. But I did ask the professional help of two accountants and one CPA when I filed an application for a housing loan through Pag-IBIG.

 tax_matrix.jpg

Active Member
John Paul Z Member Since: Mar 19, 2017

So now that im done with my "dreadful" experience with BIR to get my COR, books, receipts etc. Im down with this million dollar question LOL what would I write in this Ledger and Journal that was provided. 

I hope you also enlighten me with this :-)

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

@John Paul Z wrote:

So now that im done with my "dreadful" experience with BIR to get my COR, books, receipts etc. Im down with this million dollar question LOL what would I write in this Ledger and Journal that was provided. 

I hope you also enlighten me with this :-)


 

 

I'm glad you survived the BIR challenge, John Paul.  This is how I prepare my Cash Receipt Ledger.  If I invoice my clients on a Monday, I usually log onto the matrix additional pertinent information like the foreign exchange rate published by the Bangko Sentral ng Pilipinas (BSP).  Then when I receive Upwork's emailed notification containing the FOREX rate, I calculate the risk involved in the conversion.  The sum of all FOREX risks may be computed as a deduction.  I did it last year.

 

cash_receipt_ledger.jpg

Active Member
John Paul Z Member Since: Mar 19, 2017

That's interesting. So what you do is you do invoicing per work or transaction you do with the client. And as for the UW's fee you make it as your expense and you support it with the file you download from them.

Last month what I did was, I add up all the earnings I earned per week then whatever the equivalent in peso i receive in my bank thats the amount I write in my OR.

 

I'll try to recreate the same excel file you did, and hopefully it works for me too.

 

Thanks you. Smiley Very Happy

 

 

PS. HAPPY MOTHER'S DAY to you <3

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

@John Paul Z wrote:

That's interesting. So what you do is you do invoicing per work or transaction you do with the client.

 

I issue invoices based on time segments as reflected in my work diary.

 

And as for the UW's fee you make it as your expense and you support it with the file you download from them.

 

This action is better suited with my tax payments using the software.  What I like about invoicing on Mondays is that it seals the process for the week and I tend to have more balance in my schedule that way.  

Last month what I did was, I add up all the earnings I earned per week then whatever the equivalent in peso i receive in my bank thats the amount I write in my OR.

 

That can also be done.  The rationale is that the higher our net earnings are, the more taxes we pay.  

 

I'll try to recreate the same excel file you did, and hopefully it works for me too.

 

The CSV files are downloadable.  I just add some other elements that I deem essential.

 

Thanks you. Smiley Very Happy

 

 

PS. HAPPY MOTHER'S DAY to you <3

 

Thank you. 


 

Frequent Visitor
Geralyn B Member Since: Sep 16, 2015
Hi All,

When you applied for professional, can it declare that you are practicing your profession for 4 years now?
Community Guru
Juvy Ann P Member Since: Oct 29, 2015

Both professional and sole proprietor categories are valid when it comes to freelancers who are trying to validate their business ventures at this platform.  When you have been a professional for years and want to be a freelancer, most likely, you will retain your TIN so it won't really matter how long you have been practicing your profession.

Active Member
John Paul Z Member Since: Mar 19, 2017

Hi Juvy Smiley Happy

Do you know how file 1701Q ? Well this will be my first quater filling for my quarterly. Im having confusion what should I writing in line item number 29 and 33

11.JPG

 

If im into a business that has an inventory i know that COGS should be put in there but since i offer services to my clients , im confused whether i should put my internet bill and electric bill under line item 29 or if it should go to line item 33

same goes with my gov't contribution, insurance, memorial , hmo and the likes. not sure if i should put it in 29 or 33.

Hope u can help.

Community Guru
Juvy Ann P Member Since: Oct 29, 2015

Hi John Paul,

 

Is this for April 15, 2017 or for August 15, 2017?  I am assuming that this is for the first quarter (covering the months of January, February and March).  In regards to your concern on item no. 29, that is supposed to be left as zero since we are opting for the 40% optional deduction.  Deductions include Upwork service fess and direct-to-local-bank transaction fees. But this figure will not be reflected on the sheet generated by the software.  It auto-calculates the taxable income.  The taxable income is derived from the NET EARNINGS (gross income minus the sum of deductions I mentioned above).

 

Internet usage and electricity bills fall under utilities which are not necessarily reflected on 1701Q for taxpayers opting for the 40% optional deduction.

 

Memorial, educational, healthcare and life insurance plans are tax-exempt.

 

The interest rate per annum is 20% so most likely, your interest bracket will be at 0.033 since you are delayed by two months.  Please refer to the assumption I previously stated.  Multiply this value with your tax payable amount and you'll have your interest rate.  The surcharge amount is derived by multiplying the tax payable amount by 0.25.  The tax due for taxable income below Php 10,000.00 is 5% of the taxable income.

 

Please let me know if there are other things that bother you (except for asking me to be your client). lol

Active Member
John Paul Z Member Since: Mar 19, 2017

this will be for the second quater. (august 15) I received my COR during the second quater, so my taxable months will be from April onwards.

I opt for the itemized deduction. so im wondering whether i should put something in line 29 or everything should be in 33